Yesterday we were all about CrowdStrike’s Q2 earnings , but today we’re moving to another pair of 2020’s biggest winners: Cloudflare (NYSE:
Sept. 2, 2021
Yesterday we were all about CrowdStrike’s Q2 earnings, but today we’re moving to another pair of 2020’s biggest winners: Cloudflare (NYSE: NET) and Fastly (NYSE: FSLY).
With each jumping close to 5% on Wednesday, investors are asking why.
The answer could lie with Apple
Apple has been both the cause and solution to all of life’s problems of late, it seems. When it’s not providing us with some of the most innovative and life-impacting changes to technology, it’s pumping out controversial iOS privacy changes or hindering smaller developers on its App Store.
But its upcoming iOS 15 update represents a potentially lucrative revenue stream for the likes of Cloudflare and Fastly. As leaders in content delivery networks (CDNs), the two firms stand to gain from Apple’s iCloud Private Relay feature that will come with the update.
This involves protecting users who browse apps and Safari on iOS devices via what’s called ‘dual hop’ architecture — relaying users through multiple routers to protect their identity. According to Piper Sandler analyst James Fish, this is likely to heavily involve CDNs, and thus benefit Cloudflare and Fastly.
In short: Apple’s upcoming iOS software could create an incremental annual opportunity for CDNs of approximately $40 million to $74 million over the next five years. This is likely to grow further as more and more software manufacturers adopt a dual hop architecture.
With the global CDN market valued at an estimated $10.7 billion as of 2020 and expected to grow at a CAGR of 30% through 2025, the path ahead is looking bright for these cloud infrastructure leaders.
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